TMI Blog2022 (2) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority would be competent to initiate the proceedings, we do not find any reason to deny the prayer made by learned Additional Solicitor General, because what exists impliedly can be given expressly. Therefore, while accepting the challenge to the reassessment notices under Section 148 of the Act of 1961, we hold that the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 must be read as applicable to the reassessment proceedings as on 31.3.2021 in view of the judgments of the different High Courts and we would grant liberty to the assessing authorities as prayed by learned Additional Solicitor General. In view of the ratio propounded in cases MON MOHAN KOHLI VERSUS ASSISTANT COMMISSIONER OF INCOME TAX ANR. [ 2021 (12) TMI 664 - DELHI HIGH COURT] and ASHOK KUMAR AGARWAL VERSUS UNION OF INDIA THROUGH ITS REVENUE SECRETARY NORTH BLOCK AND 2 OTHERS [ 2021 (10) TMI 517 - ALLAHABAD HIGH COURT] the reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54, 17855, 17856, 22981, 18103, 18104, 18105, 18108, 18110, 18112, 18271, 18272, 18341, 18342, 18347, 18350, 18366, 18369, 18373, 18374, 18354, 18355, 18360, 18363, 18723, 18730, 18731, 18735, 18738, 18741, 18745, 18767, 18769, 19458, 19460, 19462, 19464, 19465, 19466, 19467, 19468, 19471, 19472, 23768, 23771, 23772, 23773, 19580, 19582, 19695, 19701, 19693, 19699, 22982, 19851, 19855, 19859, 19850, 19854, 19858, 19860, 19861, 23806, 19900, 19901, 19906, 19907, 19911, 19912, 25561, 20071, 20078, 20079, 20299, 20301, 20303, 20308, 20311, 20466, 20467, 20471, 20473, 21985, 17411, 17413, 17767, 17771, 20660, 20662, 20795, 20797, 23820, 20811, 20812, 20814, 21008, 21011, 21012, 21014, 21020, 21021, 21024, 21028, 25299, 25616, 21349, 21353, 21358, 21360, 21512, 21519, 21521, 27311, 21594, 21596, 21598, 27227, 21686, 21690, 21692, 22187, 22189, 22190, 23024, 23025, 23028, 23029, 23714, 23717, 23718, 23720, 23722, 23725, 26255, 25962, 23892, 23895, 23929, 23930, 23931, 24038, 24041, 25469, 25471, 25472, 25474, 25476, 25477, 25523, 25525, 25527, 25820, 25821, 25822, 26607, 26609, 26613, 26616, 26618, 26619, 26624, 26625, 26615, 26617, 26620, 26621, 26634, 26638, 26639, 26643, 26645, 26646, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 has been made by referring to the unamended provisions of Sections 147 to 151 of the Act of 1961, as existed till 31.3.2021; the amended provisions of Sections 147 to 151, which came into effect from 1.4.2021; and, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for brevity, the TOLA Act, 2020 ). 3. The reason for challenge to the Explanations is in reference to the reassessment notices issued to the petitioners under Section 148 of the Act of 1961 on or after 1.4.2021 applying the provision as it stood prior to the amendment brought in Sections 147 to 151 by the Finance Act, 2021, which has come into effect from 1.4.2021. The petitioners have been served with the notices under Section 148 of the Act of 1961 for reassessment by applying the procedure as it stood under Section 147 to 151 of the Act of 1961 prior to 1.4.2021. The challenge to the reassessment notices has been made precisely on the ground that after the amendment under Sections 147 to 151 of the Act of 1961, the notices under Section 148 of the Act of 1961 could not have been given app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.- Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- ( a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; ( b) where a return of income has been furnished by the assessee but no assessment has been made and it is noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and ( b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after the expiry of a period of six years from the end of the relevant assessment year. Explanation.- For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. 150. Provision for cases where assessment is in pursuance of an order on appeal, etc. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause ( d ) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. Explanation 1.-For the purposes of this section and section 148A, the information w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to in section 151. 148A. Conducting inquiry, providing opportunity before issue of notice under section 148. The Assessing Officer shall, before issuing any notice under section 148,- ( a ) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; ( b ) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause ( a ); ( c ) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause ( b ); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause ( b ) of sub- section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this subsection shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause ( b ) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1961 was simplified, but there is addition of Section 148-A of the Act for compliance before issuance of reassessment notice under Section 148 of the Act of 1961. 7. The main issue for our consideration is as to whether the relaxations granted by TOLA Act, 2020 extending the period of limitation can result in application of the repealed provisions after 1.4.2021 and as to whether the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 save the unamended provisions. 8. For considering the aforesaid issue, we also quote the relevant provisions of the TOLA Act of 2020, apart from the Notification No.20, dated 31.3.2021; and, the Notification No.38, dated 27.4.2021, under challenge: THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 NO. 38 OF 2020 29th September, 2020. AN ACT to provide for relaxation and amendment of provisions of certain Acts and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Seventy-first Year of the Republic of India as follows:- CHAPTER I PRELIMINARY 1. ( 1) This Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons contained in- ( I) sections 54 to 54GB, or under any provisions of Chapter VI-A under the heading B.-Deductions in respect of certain payments thereof; or ( II) such other provisions of that Act, subject to fulfilment of such conditions, as the Central Government may, by notification, specify; or ( ii) beginning of manufacture or production of articles or things or providing any services referred to in section 10AA of that Act, in a case where the letter of approval, required to be issued in accordance with the provisions of the Special Economic Zones Act, 2005, has been issued on or before the 31st day of March, 2020 , and where completion or compliance of such action has not been made within such time, then, the time-limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 31st day of March, 2021, or such other date after the 31st day of March, 2021, as the Central Government may, by notification, specify in this behalf: Provided that the Central Government may specify different dates for completion or compliance of different actions: ....... 10. Power to remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, under this sub-clause, the provisions of section 148, section 149 and section 151 of the Income-tax Act, as the case may be, as they stood as on the 31st day of March 2021, before the commencement of the Finance Act, 2021, shall apply. ( b) the compliance of any action referred to in clause (b) of subsection (1) of section 3 of the said Act relates to intimation of Aadhaar number to the prescribed authority under subsection (2) of section 139AA of the Income-tax Act, the time-limit for compliance of such action shall stand extended to the 30th day of June, 2021. ( B) where the specified Act is the Chapter VIII of the Finance Act, 2016 (28 of 2016) (hereinafter referred to as the Finance Act) and the completion of any action referred to in clause (a) of sub-section (1) of section 3 of the said Act relates to sending an intimation under subsection (1) of section 168 of the Finance Act, - ( i) the 31st day of March, 2021 shall be the end date of the period during which the time-limit, specified in, or prescribed or notified under, the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the purposes of issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, under this sub-clause, the provisions of section 148, section 149 and section 151 of the Income-tax Act, as the case may be, as they stood as on the 31st day of March 2021, before the commencement of the Finance Act, 2021, shall apply. ( B) where the specified Act is the Chapter VIII of the Finance Act, 2016 (28 of 2016) (hereinafter referred to as the Finance Act) and the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to sending an intimation under subsection (1) of section 168 of the Finance Act, and the time limit for completion of such action expires on the 30th day of April, 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June, 2021. 9. Challenge to the reassessment notices under Section 148 and Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 was addressed firstly by the Chhattisgarh High Court in the case of Palak Khatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Finance Act, 2021, after making all compliances as required by law. The prayer aforesaid has been made in reference to the assessment years where the limitation still exists for reassessment pursuant to Section 148 of the Act of 1961, as amended, apart from other provisions. 12. The arguments in reference to legal fiction were heard, but after arguing at length, learned Additional Solicitor General could not press the argument aforesaid having been decided by the Delhi High Court after considering the issue threadbare. Accordingly, we find that a serious contest does not exist regarding the applicability of the ratio propounded by the Allahabad High Court, followed by other High Courts in regard to the challenge to the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021; and the reassessment notices under Section 148 of the Act of 1961 issued on or after 1.4.2021. 13. The only issue for our consideration is as to whether the prayer made by learned Additional Solicitor General to allow the respective assessing authorities to initiate the assessment proceedings afresh in accordance with the provisions of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Finance Act, 2021 survives, the assessing authority would be competent to initiate the proceedings, we do not find any reason to deny the prayer made by learned Additional Solicitor General, because what exists impliedly can be given expressly. Therefore, while accepting the challenge to the reassessment notices under Section 148 of the Act of 1961, we hold that the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 must be read as applicable to the reassessment proceedings as on 31.3.2021 in view of the judgments of the different High Courts and we would grant liberty to the assessing authorities as prayed by learned Additional Solicitor General. 18. To fortify our conclusion, we refer to the relevant paragraphs of the judgments delivered by the Allahabad High Court and the Delhi High Court hereunder: (A) In Ashok Kumar Agarwal v. Union of India, supra, while considering a challenge to the reassessment proceedings under Section 148 of the Act of 1961 on the ground that the proceedings have been initiated after 1.4.2021, in the light of the notifications dated 30.3.2021 and 27.4.2021, the Allahabad High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. Hence, no time extension could ever be made under Section 3(1) of the Enabling Act, read with the notifications issued thereunder. 68. The submission of the learned Additional Solicitor General of India that the provision of Section 3(1) of the Enabling Act gave an overriding effect to that Act and therefore saved the provisions as existed under the un-amended law, also cannot be accepted. That saving could arise only if jurisdiction had been validly assumed before the date 1st April, 2021. In the first place Section 3(1) of the Enabling Act does not speak of saving any provision of law. It only speaks of saving or protecting certain proceedings from being hit by the rule of limitation. That provision also does not speak of saving any proceeding from any law that may be enacted by the Parliament, in future. For both reasons, the submission advanced by learned Addl. Solicitor General of India is unacceptable. 69. Even otherwise the word 'notwithstanding' creating the non obstante clause, does not govern the entire scope of Section 3(1) of the Enabling Act. It is confined to and may be employed only with reference to the second part of Section 3(1) of the Ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment or the CBDT could have issued the Notifications, plainly to over reach the principal legislation. Unless harmonized as above, those notifications would remain invalid. 73. Unless specifically enabled under any law and unless that burden had been discharged by the respondents, we are unable to accept the further submission advanced by the learned Additional Solicitor General of India that practicality dictates that the reassessment proceedings be protected. Practicality, if any, may lead to legislation. Once the matter reaches Court, it is the legislation and its language, and the interpretation offered to that language as may primarily be decisive to govern the outcome of the proceeding. To read practicality into enacted law is dangerous. Also, it would involve legislation by the Court, an idea and exercise we carefully tread away from. 74. Similarly, the mischief rule has limited application in the present case. Only in case of any doubt existing as to which of the two interpretations may apply or to clear a doubt as to the true interpretation of a provision, the Court may look at the mischief rule to find the correct law. However, where plain legislative actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion process of a corporate debtor for the said default occurring during the said period. Explanation.--For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.' 78. Plainly, in that case, the earlier provisions were not substituted rather they continued to exist. The parliamentary intervention by introducing Section 10A of that Act only provided no proceeding be instituted for any default arising after 21st March, 2020, for a period of six months or such period not exceeding one year, as may be notified. Thus, in that case, by virtue of amendment made, delegated power created, could be exercised to relax the otherwise stringent provisions of the Act, in cases, wherein difficulties arose from the spread of the pandemic COVID-19. Thus, that ratio is plainly distinguishable. 79. As to the decision of the Chhattisgarh High Court, with all respect, we are unable to persuade ourselves to that view. According to us, it would be incorrect to look at the delegation legislation i.e. Notification dated 31st March, 2021 issued under the Enabling Act, to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices in all the writ petitions are quashed. It is left open to the respective assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act as amended by Finance Act, 2021, after making all compliances, as required by law. 80. Accordingly, reassessment notice issued to the present petitioner dated 9th April, 2021 for assessment year 2017-18 is quashed. [ emphasis supplied ] (B) In Mon Mohan Kohli v. Assistant Commissioner of Income Tax, supra, while considering an identical issue, the Delhi High Court concurred with the view taken by the Allahabad High Court and the Rajasthan High Court and held as under: 42. Having heard learned counsel for the parties, this Court is of the view that by virtue of Section 1(2)(a) of the Finance Act, 2021, the substituted Sections 147, 148, 149 and 151 of the Income Tax Act, 1961 pertaining to reopening of assessments came into force on 1st April, 2021. The significance of the expression 'shall' in Section 1(2)(a) of the Finance Act, 2021 cannot be lost sight of. This is in contrast to the language under Section 1(2)(b) which states that Sections 108 to 123 of the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance of such action shall, notwithstanding anything contained in the specified Acts, stand extended. It is important to bear in mind that Section 3(1) of the Relaxation Act, 2020 does not empower the Central Government to postpone the applicability of any provision which has been enacted from a particular date. There is a difference between extension of time of an action which is getting time barred and applicability of a provision which has been enacted and notified by the Legislature. Relaxation Act, 2020 nowhere delegates power to the Central Government to postpone the date of applicability of a new law enacted by the Legislature. Relaxation Act, 2020 also does not put any embargo on the power of the Legislature to legislate. 47. Also, the impugned Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 are beyond the power delegated to the Government, as the Relaxation Act does not give power to Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Accordingly, the provisions of Section 148A had to be complied with before issuing noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Officer, Ward 4(1), S.B. Civil Writ Petition 13297/2021, respectively. 50. Consequently, Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are ultra vires the Relaxation Act, 2020 and are therefore, bad in law and null and void. ... 66. This Court is of the opinion that the new provisions are remedial and benevolent provisions which are meant and intended to protect the rights and interests of assessees as well as promote public interest. In Imperial Tobacco Ltd. v. Attorney General [1979] QB 555 at 581, Omrod LJ said, 'The object of all procedural rules is to enable justice to be done between the parties consistently with the public interest'. If the procedural rules are defective, the legal apparatus works less efficiently and the public interest suffers. If legislation is introduced to remedy the defective rule and no one suffers thereby, it is sensible to apply it to pending proceedings. 67. Consequently, this Court is of the view that the Finance Act, 2021 introduces a new regime regarding the procedure to be complied with in respect of the re-opening of an Income-tax assessment and accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per Sections 153A and 153C, the provisions of these two sections will not apply where search/survey is done after 1st April, 2021. Department contends that the erstwhile law continues to apply from 1st April, 2021 to 30th June, 2021. The erstwhile law on reopening did not cover search/survey cases. Consequently, for the search/survey done from 1st April to 30th June, there can neither be an assessment under sections 153A/153C or under 147, which cannot be the case. Further, Sections 148, 148A and 149 specifically cover cases where search/survey is done after 1st April, 2021. If department's interpretation is accepted, this specific date in all three Sections will have to be changed and read as 1st July, 2021, which cannot be done. Moreover, as the new provisions seek to bring uniformity between regular reassessments and search/survey cases, it follows that the cut off date for initiation of reassessment proceedings even for regular reassessment is 1st April, 2021. ... 84. Even if it is assumed that the impugned Explanations in the two Notifications are valid, still the impugned notices are bad in law, as the impugned Explanations only seek to effectuate the erstwhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Consequently, the impugned Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 are not conditional legislation and are beyond the power delegated to the Government as well as ultra vires the parent statute i.e. the Relaxation Act. Accordingly, this Court is respectfully not in agreement with the view of the Chhattisgarh High Court in Palak Khatuja (supra), but with the views of the Allahabad High Court and Rajasthan High Court in Ashok Kumar Agarwal (supra) and Bpip Infra Private Limited (supra) respectively. ... 103. Consequently, this Court is of the view that the Executive/Respondents/Revenue cannot use the administrative power to issue Notifications under Section 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021. This Court is also of the opinion that the Executive/Respondents/Revenue cannot frustrate the purpose of substituted statutory provisions, like Sections 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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